IN RE: TAX ASSESSMENT OF CABELA'S RETAIL, INC. BRIEF …...52,332,200.00 in 2009 and $50,085,900.00...

No 15-0888

IN RE TAX ASSESSMENT OF CABELAS RETAIL INC

BRIEF OF RESPONDENT OHIO COUNTY ASSESSOR

Patrick S Casey (WV Bar No 668) Taylor D Potts (WV Bar No 12799) CASEY amp CHAPMAN PLLC 1140 Chap line Ave Wheeling WV 26003 304-231-2405 866-296-2591 (fax)

COUNSEL FOR RESPONDENT OHIO COUNTY ASSESSOR

Table of Contents

I Statement of the Case 1

II Summary ofthe Argument 4

III Oral Argument and Decision 5

IV Standards ofReview 6

V Argument 7

A The circuit court appropriately found that the Assessors use of the cost appraisal approach was proper under the circumstances 7

1 The Assessor in fact considered all three appraisal approaches required by law and rejected the income and sales comparisonmarket data approaches 9

2 West Virginia law provides assessors with leeway and discretion to choose which appraisal approach is most appropriate under the circumstances 10

B The Assessor properly applied the cost appraisal approach under West Virginia law 11

1 Physical deterioration was appropriately handled in the Assessors tax assessment 12

2 Mr Prettyman complied with the law by considering functional obsolescence 12

3 The Assessors tax assessment took into consideration all the required factors listed tmder W Va CSR sect 11O-1P-2 13

C The circuit courts decision to uphold the tax assessments ofCabelas property was within its discretion and was not against the weight of the evidence 14

VI Conclusion 17

Table of Authorities

I Cases

Century Aluminum of West Virginia Inc v Jackson County Commission 229 W Va 215 728 SE2d 99 (2012) 8 12 13

In re Tax Assessment Against American Bituminous Power Partners LP 208 W Va 250 539 SE2d 757 (2000) 8 lO 14

In re Tax Assessment ofFoster Foundations Woodlands Retirement Community 223 W Va 14 672 SE2d 150 (2008) 6 15 16 17

Killen v Logan County Commission 170 W Va 602295 SE2d (1982) 6

Lee Trace LLC v Hess 2015 WL 7628718 CW Va Nov 20 2015) 7 12 15

Mountain America LLC v Huffinan 224 W Va 669687 SE2d 768 (2009) 6 15

ODell v Stegall 226 W Va 590 703 SE2d 561 580 n11 (2010) 6

Pope PropertiesCharleston Limited Liability Co v Kanawha County Assessor 230 W Va 382 738 SE2d 546 552 (2013) 8

Western Pocahontas Properties Ltd v County Commission of Wetzel County 189 W Va 322 431 SE2d 661 (1993) 6 14

II Statutes

W Va Code sect 11-3-1(a) 7

III Regulations

W Va CSR sect 110-lP-2 5 13 15 18

W Va CSR sect 110-lP-211 13 14

W Va CSR sect 1l0-lP-2117 16


W Va CSR sect 1lO-lP-213 13 14

W Va CSR sect 110-1P-214 14


ii

w Va CSR sect 110-1P-2211 11

W Va CSR sect 110-IP-222 7



W Va CSR sect 110-1P-2320 11

iii

Ie Statement of the Case

This appeal concerns Petitioner Cabelas Retail Inc s (Cabelas) challenge to both the

2009 and 2010 tax assessments of its store at The Highlands retail commercial development in

Triadelphia Ohio County West Virginia Cabelas is a national chain of retail stores that focuses

on the sale of outdoor recreational activity equipment and apparel In 2004 the massive 175000

plus square foot store was opened at The Highlands development as one ofCabelas flagship retail

locations In keeping with its retail model Cabelas built the store with higher end finishing

exhibits such as a large aquarium and other attractions that make it not only a retail store but a

destination experience for those looking for the very best in outdoor accessories and apparel

Cabelas initially challenged the Ohio County Assessors (Assessor) appraisal and tax

assessment of its retail store at the Highlands in 2009 by filing for a Review of Property Valuation

with the Ohio County Commission (Commission) See JT APP 15 It filed a similar protest to

the 2010 appraisal and tax assessment See JT APP 361 In those challenges Cabelas claimed

that the Assessors valuation of $5233220000 in 2009 and $5008590000 in 2010 were

excessive and did not reflect the actual market value of the Cabelas property See JT APP 5-13

348-356 The Commission held hearings for both challenges and after hearing all evidence and

testimony submitted by both Cabelas and the Commission upheld the tax assessments for both

2009 and 2010 See JT APP 54 amp 402

Both the 2009 and 2010 challenges were made for the same reasons and consisted largely

of the same testimony facts and evidence In support of its challenges Cabelas hired licensed

appraiser Douglas Herold (Mr Herold) to perform an appraisal and introduce testimony See JT

APP 16-53 135-157 amp 222-310 Mr Herold testified that the Assessors valuation ofthe Cabelas

store was inaccurate because it was based on the cost appraisal approach See JT APP 141-142

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According to Mr Harold since the Cabelas store was built with unique features which may only

be valued by Cabelas the more appropriate approach for determining the stores true value was

the sales comparisonmarket data appraisal approach Id In fact Mr Herold did not even perform

a cost approach appraisal because he opined that it was not the best approach See JT APP 143

Using the sales comparisonmarket data appraisal approach Mr Herold used the sale of other big

box stores such as Lowes Walmarts Targets etc to find the value ofCabelas Highlands store

to be $2260000000 for both the 2009 and 2010 tax years See JT APP 19 amp 366 This number

did not include the value of the land which was undisputed at approximately $14000000

Jeff Prettyman (Mr Prettyman) conducted the valuations of the Cabelas store for the

Assessor in both 2009 and 2010 and testified in support of the Assessor at the hearings See JT

APP 152-157 amp 230-269 In choosing to use the cost appraisal approach Mr Prettyman testified

that he considered both the sales comparisonmarket data approach and the income approach See

JT APP 250 In deciding against their use Mr Prettyman stated that due to the Cabelas store

uniqueness there were no sales of similar enough properties to properly perform the sales

comparisonmarket data approach and that he did not have the necessary data ie sales and

income figures for Cabelas retail business to perform an income approach appraisal See JT APP

152 amp 259-260 Cabelas only argument in the initial hearing was that the sales comparisonmarket

data appraisal approach was more appropriate and gave a more accurate value than the cost

appraisal approach used by the Assessor See JT APP 135-157

The Commission ultimately upheld the tax assessments for both 2009 and 2010 See JT

APP 54 amp 402 Cabelas appealed both cases to the circuit court challenging the Commissions

1 Mr JeffPrettyman is identified as Mr Freeman in the 2009 Board of Equalization and Review hearing transcript See IT APP 152-157 Mr Prettyman is an employee of the Ohio County Assessors office He testified that he has performed thousands ofcommercial appraisals for the Assessors office and that he has all the required training and certifications under state law See IT APP 231242-243

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decision to uphold the appraisals and assessments See JT APP 3-13 amp 346-356 The 2009 and

2010 appeals were consolidated for the purposes of the appeal See JT APP 452-458 In an order

dated July 202011 the circuit court remanded the case to the Board of Equalization and Review

for further factual development stating

Based upon the limited record it is unclear who to blame for the fact that there was insufficient data for [Mr] Prettyman to conduct [the] sales and income approaches to valuation Without that data the Assessors determination that the cost approach was the most appropriate method for valuing the subject property was correct and was neither arbitrary capricious nor unreasonable However the West Virginia Supreme Court has given clear directive in W Va CSR sect 1l0-lP-214 that each of these factors should be considered in the appraisal of a specific parcel of commercial real property The record does not disclose whether each of these enumerated factors has been thoroughly considered The Court FINDS that the Assessor failed to place any evidence on the record to show whether he considered the required appraisal factors set forth in W Va CSR sect110-lP-211 to 214 (1991) Therefore the matter must be REMANDED to the Board of Equalization and Review for further determination of the factors and method utilized by the Assessor in his cost based approach for valuation ofthe Cabelas property

See JT APP 196-197 Thus the circuit court remanded the cases to the Board ofEqualization and

Review for the sole purpose ofdeveloping more testimony and evidence regarding the factors used

in determining the assessment generated by the coast appraisal approach See JT APP 196 In

recognizing the broad discretion ofthe Assessor and the challenging taxpayers burden the circuit

court decided that the Assessor had the authority and discretion to choose the cost appraisal

approach in this situation Id The remand was strictly limited to whether Mr Prettyman

considered the requisite factors set forth in W Va CSR sect110-1P-2l1 to 214 (1991)

The remand hearing was held on February 282013 and Mr Prettyman elaborated on his

testimony regarding his use of the cost appraisal approach See JT APP 230-269 Mr Prettyman

testified that he considered all the factors listed in W Va CSR 110-IP-211-214 as requested

by the circuit court See JT APP 234-242 Mr Prettyman explained how the individual factors

were considered and what weight they were afforded See JT APP 230-269 Importantly on cross

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examination Cabelas did not attempt to obtain any further information about Mr Prettymans

consideration ofthe factors See JT APP 243-263 Instead Cabelas ignored the purpose and scope

of the remand order and focused its questions predominantly on why the cost appraisal approach

was chosen even though the circuit court had already found the Assessors use ofthe cost appraisal

approach to be appropriate See JT APP 250-262 Cabelas hired yet another appraiser Jay

Goldman (Mr Goldman) who simply regurgitated Mr Herolds original appraisal See JT APP

271-308

The Commission once again upheld the tax assessments and Cabelas appealedmiddot to the

circuit court once again See JT APP 312 The circuit court affirmed the judgment of the

Commission See JT APP 459-467 In upholding the valuations for both 2009 and 2010 the circuit

court held

[This] Court is bound by the law and cannot substitute its own judgment when such a heavy burden is born by the taxpayer Arbitrary or unjust action by an assessor in fixing the value of land must be shown by clear and cogent proof in order that the complaining taxpayer may be given relief There is no bright line rule as to how to apply depreciation only that it is required to be considered It is clear from the testimony that the Assessor did in fact consider depreciation as required but then rejected it Therefore it is the finding of the Court that Cabelas has failed to show by clear and convincing evidence that the Assessors valuation of the Cabelas property for the years 2009 and 2010 was arbitrary or unjust and therefore the valuations are hereby AFFIRMED

See JT APP 466-467 It is from this order that Cabelas appeals

II Summary of the Argument

The circuit court did not err in upholding the Assessors 2009 and 2010 tax assessments of

Cabelas flagship store at The Highlands development in Ohio County The Assessors appraisals

were made considering all the required factors under West Virginia law and represent the fair value

of Cabelas property Cabelas did not meet the taxpayers burden of proving by clear and

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convincing evidence that the appraisals were arbitrary or unjust or that the circuit court otherwise

abused its discretion in upholding the assessments

Cabelas argues that Mr Prettyman did not choose the most accurate appraisal approach

However the question is whether he considered using the three approaches not whether he used

them and the fact is he did Mr Prettyman testified that [b]ecause ofCabelas uniqueness I felt

that a[n] income approach nor a sales approach a sales approach can apply Theres nothing

that sells like it An income approach - I was not furnished [Cabelas income infonnation] so that

left me the cost approach See JT APP 152 The circuit court did not err in upholding the

assessments because Mr Prettyman appropriately applied the cost appraisal approach as required

by West Virginia law West Virginia law requires that all the depreciation and factors listed in W

Va CSR sect 110-1P-2 be considered whenperfonning the cost appraisal approach Mr Prettyman

stated that he considered the depreciation and factors on several different occasions Finally the

circuit court did not err in upholding the assessments because Cabelas did not prove by clear and

convincing evidence that the Assessors valuation was plainly wrong unjust or arbitrary The fact

that the circuit court given Cabelas high burden of proving the Assessors valuation was wrong

determined to accept the Assessors valuation as in compliance with West Virginia law and

reasonable under the circumstances is not an abuse of discretion

III Statement Regarding Oral Argument and Decision

The Assessor states that oral argument is proper pursuant to the requirements ofW Va R

of App Pro 18(a) This case is further appropriate for Rule 19 argument because it involves both

claimed error in the application of settled law and claims of results against the weight of the

evidence W Va R of App Pro 19(a) The Assessor also contends that this case is otherwise not

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appropriate for decision on the memorandum because of its complexity length and importance to

the application of tax assessments throughout the state in general

IV Standards of Review

Cabelas has a significant burden to overturn the appraisal and the circuit courts judgment

A county assessors valuation of a property is presumed to be correct Western Pocahontas

Properties LTD v County Commission ofWetzel County 189 W Va 322431 SE2d 661664

(1993) To prevail a challenging taxpayer must show by clear and convincing evidence that the

tax assessment is wrong in order to have it altered In re Tax Assessment of Foster Foundations

Woodlands Retirement Community 223 W Va 14672 SE2d 150 160-163 (2008) To meet this

heightened burden the taxpayer must do more than simply introduce evidence that is counter to

the Assessors valuation but must meet the highest standard of civil proof and provide evidence

enough to allow the fact finder to make a decision without hesitation ODell v Stegall 226 W

Va 590 703 SE2d 561 580 nll (2010) This requires more than the simple testimony of an

opposing appraisers findings Killen v Logan County Commission 170 W Va 602 295 SE2d

689 Syl pt 8 (1982)

Further when reviewing tax assessments courts apply a trifurcated standard of review If

the tax assessment is challenged based on the law the courts review it under a de novo standard In

re Tax Assessment ofFoster Foundations Woodlands Retirement Community 223 W Va 14672

SE2d 150 154-155 (2008) However if the tax assessment is challenged for factual

determinations it is reviewed under the clearly erroneous standard Mountain America LLC v

Huffman 224 W Va 669 687 SE2d 768 678 (2009) In re Tax Assessment of Foster

Foundations Woodlands Retirement Community 223 W Va 14672 SE2d 150 154-155 (2008)

Finally the trial courts ultimate order upholding or overturning a tax assessment is reviewed under

6

an abuse ofdiscretion standard Lee Trace LLC v Hess 2015 WL 7628718 at 2 CW Va Nov 20

2015)

V Argument

The Assessor contends that the circuit courts affmnation of its tax assessments was

appropriate and that the circuit court committed no error with regard to upholding either the tax

assessment values or the methods used to achieve them In support of this position the Assessor

presents three arguments (1) the circuit court appropriately found that the Assessors use of the

cost appraisal approach was proper under the circumstances (2) the circuit court appropriately

upheld the tax assessments based on the Assessors use of the cost appraisal method and (3) the

circuit courts decision upholding the Assessors valuations was not against the weight of the

evidence

A The circuit court appropriately found that the Assessors use of the cost appraisal approach was proper under the circumstances

For tax assessment purposes West Virginia law requires that all property be assessed

annually at sixty percent of its true and actual value that is to say at the price for which the

property would sell if voluntarily offered for sale not the price which might be realized if the

property were sold at a forced sale W Va Code sect 11-3-1(a) In fmding this price county

assessors are instructed to consider and use where applicable three (3) generally accepted

approaches to value (A) cost (B) income and (C) market data[lsales comparison] W Va CSR

sect 110-IP-221 (1991) The choice of method to be used depends on the circumstances as the

most accurate form of appraisal should be used [when possible] but because of difficulty in

obtaining necessary data from the taxpayer or due to the lack of comparable commercial andlor

industrial properties choice between the alternative appraisal methods may be limited W Va

CSR sect 110-1P-222 This Court has continually held that [t]itle 110 Series IP of the West

7

Virginia Code ofState Rules confers upon the State Tax Commissioner discretion in choosing and

applying the most accurate method of appraising commercial and industrial properties The

exercise of such discretion will not be disturbed upon judicial review absent a showing of abuse

ofdiscretion In re Tax Assessment Against American Bituminous Power Partners LP 208 W

Va 250 552 SE2d 757 759 Sly Pt 5 (2000) Century Aluminum of West Virginia Inc v

Jackson County Comn 229 W Va 215 782 SE2d 99 108 (2012) and Pope Properties

Charleston Limited Liability Co v Kanawha County Assessor 230 W Va 382 738 SE2d 546

552 (2013)

In attempting to frame its initial challenge as an issue oflaw Cabelas mischaracterizes the

holding of the circuit court The circuit court in fact found that all three approaches must be

considered under West Virginia law See JT APP 193-196 In so finding the circuit court stated

[t]he specific direction is that [i]n determining an estimate of fair market value the Tax

Commissioner will consider and use where applicable three (3) generally accepted approaches to

value (A) cost (B) income and (C) market data 110 W Va CSR sect 1P-22l See JT APP

193(emphasis added) however [i]n the case of In re Tax Assessment Against American

Bituminous Power Partners LP 208 W Va 250 539 SE2d 757 764 (2000) the Court made it

clear that the Tax Commissioner has discretion in choosing the most reliable technique for

appraising property See JT APP 194 This clearly shows that the circuit court understood

that the three approaches need to be and were considered and that it ultimately found no abuse of

discretion in the Assessors choice of the cost approach under the circumstances

8

1 The Assessor in fact considered all three appraisal approaches required by law and rejected the income and sales comparisonmarket data approaches

In further challenge to the Assessors use of the cost appraisal approach Cabelas argues

that the Assessor did not consider the income or sales comparisonmarket data approaches as

required by West Virginia law Cabelas main support for this argument is that Mr Prettyman

testified that he did not have the resources necessary to research comparable properties for either

approach and that he did not provide in depth testimony regarding his consideration of them

However once again Cabelas either misstates or misunderstands the testimony

It is apparent that the income approach is inappropriate to value Cabelas property because

a Cabela s property has never been rented West Virginia law expects that income will be judged

based on the income from the preceding three years W Va 110-1P-2119 Even Cabelas

appraiser Mr Herold stated he would not rely on the income approach because of the fact no

rental income information existed for a Cabelas property See JT APP 151 Due to the lack of

accurate information Mr Prettymans choice not to use the income approach was appropriate

In regards to the sales comparisonmarket data approach Mr Prettyman stated that he

considered the sales comparison approach but ultimately rejected it because he believed the

Cabelas property was unique and had no comparable sales to judge it against See IT APP 152

260 amp 268-269 While Mr Prettyman admitted that he was more limited in his information and

resources than Cabelas hired appraisers he did not testify that he did not have access to

comparables information See IT APP 260-261 The fact that Mr Prettyman has different

resources than a large commercial appraiser does not mean he cannot properly obtain the data and

appropriately consider the sales and income information Mr Prettymans finding that no

comparables existed does not show he did not consider the sales comparisonmarket data approach

9

To the contrary it is evidence that he considered it and then rejected it because he did not find it

reliable The statute requires the three appraisal approaches to be consider[ ed] and use[ ed] where

applicable Mr Prettymans actions were appropriate under the circumstances

2 West Virginia law provides assessors with leeway and discretion to choose which appraisal approach is most appropriate under the circumstances

Thus far the Assessors arguments have been premised on the fact that even under Cabela s

extraordinary and narrow view of the facts and law the tax assessments were still conducted

appropriately However Cabelas view is an inaccurate statement ofthe law Under Cabelas view

by consider all three approaches what is actually required is that an assessor performs all three

appraisal approaches and only then discount one or more of them based on the results See JT

APP 254 When a circuit court found that West Virginia law required the use of more than one

appraisal approach as Cabelas does here this Court found it to be an erroneous interpretation and

application of the law In re Tax Assessment Against American Bituminous Power Partners LP

208 W Va 250 539 SE2d 757 763 (2000) In finding this to be an incorrect interpretation of

the law this Court found that there is a decided difference between the words consider and use

and the fact that the regulations require an assessor to consider means that actual use is not

required Ultimately holding that [w ]hen the regulation in question is read as a whole it becomes

clear that the [assessor] has considerable discretion in choosing the applicable method of valuing

a particular property and that [t]he exercise of such discretion will not be disturbed upon

judicial review absent a showing of abuse of discretion rd at 764

Mr Prettyman was within his authority to choose the cost appraisal approach The final

question is whether Mr Prettymans choice to do so was an abuse ofdiscretion The answer to this

question is no Mr Prettyman testified that when valuing a building that is built by its owner for

the owners use and actually owner occupied the proper approach to employ is the cost See JT

10

APP 269 He further found that there were no appropriate comparables to judge Cabelas property

against See JT APP 152 260 amp 268-269 The mere fact that Cabelas appraisers disagree or

have found otherwise is not enough to show Mr Prettymans decision was unreasonable or an

abuse of discretion give the facts

B The Assessor properly applied the cost appraisal approach under West Virginia law

West Virginia law defines the cost appraisal approach as replacement cost of the

improvements reduced by the amount of accrued depreciation and added to an estimated land

value W Va CSR sect 1l0-IP-2211 It further goes on to state that [i]n applying the cost

approach the [ assessor] will consider three types ofdepreciation physical deterioration functional

obsolescence and economic obsolescence Id Making the cost approach formula replacement

cost of improvements less all types of depreciation added to a land value W Va CSR sect

110-IP-234 Going on to define functional obsolescence as [t]he loss of value due to factors

such as excess capacity changes in technology flow of material seasonal use part-time use or

like factors [ or] the inability to perform adequately the function for which an item was designed

W Va CSR sect 110-IP-238 and physical deterioration as [a] loss in value due to natural

wear and tear of property reSUlting from age use abuse etc W Va CSR sect 110-IP-2320

It must be noted that the parties concede that there is no economic obsolescence in relation

to the Cabelas property See JT APP 286 That leaves two depreciation considerations physical

deterioration and functional obsolescence Cabelas argues that depreciation was improperly

handled by the Assessor in its valuation of the Cabelas property

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1 Physical deterioration was appropriately handled in the Assessors tax assessment

Absent some exceptional damage wear and tear for commercial retail properties should

occur at the same rate The West Virginia State Tax Commissioner has given counties a state

mandated mass appraisal system which automatically accounts for physical deterioration of

buildings at a fixed rate See JT APP 235-238 246-248 amp 256-258 Cabelas challenge in relation

to this is that Mr Prettyman did not take into consideration items which may depreciate at a faster

rate than the physical structure of the building itself such as HV AC paint roofing etc See JT

APP 286 However in Lee Trace LLC v Hess this Court cited to the testimony of the Berkeley

County Deputy Assessor who testified that the state mandated appraisal system had fields that

account for all required depreciation 2015 WL 7628718 at 3 (W Va Nov 20 2015) Further Mr

Prettyman testified that the state mandated system took into consideration the depreciation ofitems

such as HV AC roofing etc by factoring it in with the physical deterioration of the building See

JT APP 256-257 Cabelas can point to no testimony or evidence that shows the mass appraisal

system does not take these items into consideration and therefore cannot show that the Assessor

was clearly wrong in his use of the mass appraisal system for physical deterioration purposes

2 Mr Prettyman complied with the law by consideration functional obsolescence

Cabelas argues that Mr Prettyman did not appropriately use functional obsolescence

specifically super adequacy in performing the cost based appraisal However in two recent

cases this Court held that what is required when preforming the cost appraisal approach is that the

three suggested types ofdepreciation be considered not that they be employed Century Aluminum

ofWest Virginia Inc v Jackson County Comn 229 W Va 215 782 SE2d 99 108-109 (2012)

and Lee Trace LLC v Hess 2015 WL 7628718 at 3 (W Va Nov 20 2015) Absent from the

12

requirement of consideration is direction or a requirement regarding how to consider them

Century Aluminum 782 SE2d 99 108 There is no requirement under West Virginia law that an

assessor make adjustments to an assessment because of physical deterioration functional

obsolescence or economic obsolescence rd at 108-109

Mr Prettyman considered the issue of super adequacy in regards to his assessment of

Cabelas property See JT APP 238-239 In doing so he performed his duty under West Virginia

law Cabelas has not submitted any evidence that the Assessor failed to consider functional

obsolescence In fact their argument is that he considered it and then improperly failed to use it

Thus Cabelas claim fails to show Mr Prettyman did not comply with West Virginia law and is

not enough to show the assessments were wrong or that the circuit court abused its discretion in

finding he complied with the law

3 The Assessors tax assessments took into consideration all the required factors listed under W Va CSR sect llO-lP-2

In relation to appraisals of any kind West Virginia law lays out numerous factors which

must be considered See generally W Va CSR sect 11O-1P-2 These include the location of the

property its characteristics ease of alienation of the property size of property and the impact its

sale would have on surrounding properties purchases within the last eight years transactions

involving comparable properties value of the property to its owner condition of the property

income produced by property in preceding three years and other assessments using commonly

accepted methods ofdetermining value W Va CSR sect 110-1P-2111-10 Other considerations

which are important to valuing a property are its location size shape topography accessibility

present use highest and best use easements zoning availability ofutility income imputed to the

land and supply and demand for land of a particular type W Va CSR sect 110-lP-2131-12

Recognizing that [e]ach of these factors should be considered in the appraisal [s]ome

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however maybe given more weight than others W Va CSR sect 11O-1P-214 (1991) There is

no requirement that each factor be used only considered In re Tax Assessment Against American

Bituminous Power Partner LP 208 W Va 250 529 SE2d 757 764 (2000)

The only issue on remand was whether Mr Prettyman took into consideration all the factors

required by W Va CSR sect 11O-1P-2111-10 and W Va CSR sect 110-1P-2131-12 Mr

Prettyman testified that he considered all of the factors before the Board of Equalization and

Review See IT APP 232-242 In his testimony Mr Prettyman with counsel went through each

factor stating that he considered each in his assessments See IT APP 241-242 By considering

all required factors both generally and individually he has met his obligation under West Virginia

law Despite holding a high burden Cabe1a s chose to ignore the scope and purpose ofthe remand

order and ask questions almost exclusively regarding Mr Prettymans choice to use the cost

appraisal approach Id The circuit court in its discretion was convinced that Mr Prettyman had

perfomled his obligations under West Virginia law

It is clear that the Assessor complied with West Virginia law and appropriately applied the

cost appraisal approach Mr Prettyman considered all forms of depreciation and all required

factors as mandated by the law

C The circuit courts decision to uphold the tax assessments of Cabelas property was within its discretion and was not against the weight of the evidence

As noted above in challenging the tax assessments Cabelas had a significant burden

because county tax assessments are presumed to be accurate and correct with the burden falling

on the taxpayer to show by clear and convincing evidence that the tax assessment was erroneous

Western Pocahontas Properties Ltd v County Commn of Wetzel County 189 W Va 322431

SE2d 661 663-664 (1993) Even if a taxpayer is capable of presenting clear and convincing

evidence they will not necessarily win a challenge When it comes to the factual determinations

14

ie the Assessors reasoning behind the use or non-use ofany items required to be considered this

Court is limited to overturning these findings only upon proof that they are clearly erroneous

Mountain America LLC v Huffman 687 SE2d 768 678 (2009) and In re Tax Assessment of

Foster Foundations Woodlands Retirement Community 223 W Va 14672 SE2d 150 154-155

(2008) Finally the trial courts ultimate order upholding or overturning a tax assessment is

reviewed under an abuse of discretion standard Lee Trace LLC v Hess 2015 WL 7628718 at 2

(W Va Nov 20 2015)

Taking these standards into consideration it is apparent that Cabelas claims regarding the

weight of the evidence must fail Cabelas has submitted evidence in the form of an appraisal and

testimony by Mr Herold supported by Mr Goldman However evidence that merely contradicts

that of the Assessors is not enough for Cabelas to overcome its burden In order to overturn the

decision of the circuit court this Court must find that Mr Prettyman violated West Virginia law in

performing his assessment or that there was some defect in his reasoning that made the assessment

obviously wrong or unreasonable Neither of these can be found here

As shown above Mr Prettyman took into account all three appraisal methods the three

types of depreciation required under the cost approach and all the factors in W Va CSR 110shy

IP-2 before coming to his final conclusions and assessment values Mr Prettyman clearly

complied with West Virginia law and his appraisal is not clearly erroneous

Differences in the opinions of appraisers regarding different considerations and overall

value is not uncommon In fact even Cabelas appraisers admitted to as much in their testimony

See JT APP 288 In choosing to rely on the sales comparisonmarket data appraisal approach

Cabelas appraisers gave significant weight to how the super adequacies effected Cabelas

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property value On the other hand Mr Prettyman did not find that it effected the value ofCabelas

property because it did not a

ffect Cabelas use of it Cabelas ultimately choose to build to suit the needs that were most

important to it and he could not find an instance of Cabelas selling a property that would show

reduction in market value for this reason See JT APP 152240-241 267-269 Based on these

considerations Mr Prettyman found that Cabelas property did not suffer from any functional

obsolescence including super adequacies These differences of opinion regarding super

adequacy and its effect are not enough to show by clear and convincing evidence that Mr

Prettyman was wrong nor are they enough to show that the circuit court abused its discretion in

accepting the testimony ofMr Prettyman and upholding the assessments

Beyond this lack of evidence the appraisal submitted by Cabela s suffers from its own

inadequacies and as such fails to be clear and convincing evidence that the Assessors tax

assessments were plainly wrong This Court has found that [t]he appraisal criteria [should] take

into account [t]he value of such property to its owner W Va CSR sect 110-1P-2117

suggesting that a particular parcel ofproperty may be valued at one amount by its owner while it

may be valued differently by persons other than its owner In re Tax Assessment of Foster

Foundations Woodlands Retirement Community 223 W Va 14672 SE2d 150 172 (2008) In

In re Tax Assessment ofFoster Foundations Woodlands Retirement Community this Court upheld

a tax assessment over a challenge of because it is a not-for-profit corporation it may have

incurred construction costs that cannot be recouped ifthe property is sold because the costs ofsuch

improvements allegedly were greater than their market value Id at 170 In upholding the

assessment and the lower courts judgment this Court noted that West Virginia law takes into

consideration and allows considerations outside of pure market value Id at 172

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Cabelas argues that because of its retail model it has spent money on its property that the

market may not necessarily value This is a consideration allowed to be taken into account by West

Virginia law The extra amenities Cabelas put into its Highlands property bring it more income

from the property It also allows Cabelas to reap the benefits ofextra visitors further sales better

marketing and various other benefits Allowing Cabelas to build this type of property and then

automatically discount it because of market value is to allow Cabelas to reap the rewards of its

property without paying its fair share ofthe taxes Which is exactly what these other considerations

were included to avoid See eg In re Tax Assessment of Foster Foundations Woodlands

Retirement Community

By ignoring West Virginia law that allows and requires for considerations outside of pure

market or resale value Cabelas appraisal fails to comply with West Virginia law If Cabelas

appraisal fails to comply with the law then it cannot be proper evidence to support a finding that

the Assessors was clearly wrong For the forgoing reasons Cabelas has failed to carry its burden

ofproof and prove not only that the Assessor was plainly wrong but that the circuit court abused

its discretion in holding as it did

VI Conclusion

West Virginia law gives significant latitude and discretion to county tax assessors in

choosing the methodology of appraising a property so long as they take into consideration the

factors noted in W Va CSR 11O-1P-2 The circuit court was correct in determining that the

appraisal of the Cabelas property was performed in compliance with West Virginia law and that

Cabelas failed to carry its burden by clear and convincing evidence that the appraisals were

arbitrary illegal or otherwise unjust or inappropriate For these reasons Respondent Assessor

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prays that this Court affirm the circuit courts final judgment upholding the Assessors tax

assessment for both 2009 and 2010

Respondent

By ____________-~~----_+------

Patrick S Casey (WV Bar No 668) Taylor D Potts (WV Bar No 12799) CASEY amp CHAPMAN PLLC 1140 Chap line St Wheeling WV 26003 304-231-2405 866-296-2591 (fax)


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Table of Contents

I Statement of the Case 1

II Summary ofthe Argument 4

III Oral Argument and Decision 5

IV Standards ofReview 6

V Argument 7

A The circuit court appropriately found that the Assessors use of the cost appraisal approach was proper under the circumstances 7

1 The Assessor in fact considered all three appraisal approaches required by law and rejected the income and sales comparisonmarket data approaches 9

2 West Virginia law provides assessors with leeway and discretion to choose which appraisal approach is most appropriate under the circumstances 10

B The Assessor properly applied the cost appraisal approach under West Virginia law 11

1 Physical deterioration was appropriately handled in the Assessors tax assessment 12

2 Mr Prettyman complied with the law by considering functional obsolescence 12

3 The Assessors tax assessment took into consideration all the required factors listed tmder W Va CSR sect 11O-1P-2 13

C The circuit courts decision to uphold the tax assessments ofCabelas property was within its discretion and was not against the weight of the evidence 14

VI Conclusion 17


I Cases










II Statutes


III Regulations

W Va CSR sect 110-lP-2 5 13 15 18







ii

w Va CSR sect 110-1P-2211 11




W Va CSR sect 110-1P-2320 11

iii
























1























2


















3







271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















15
























16
















VI Conclusion







17



Respondent

By ____________-~~----_+------



18


I Cases










II Statutes


III Regulations

W Va CSR sect 110-lP-2 5 13 15 18







ii

w Va CSR sect 110-1P-2211 11




W Va CSR sect 110-1P-2320 11

iii
























1























2


















3







271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















15
























16
















VI Conclusion







17



Respondent

By ____________-~~----_+------



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w Va CSR sect 110-1P-2211 11




W Va CSR sect 110-1P-2320 11

iii
























1























2


















3







271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















15
























16
















VI Conclusion







17



Respondent

By ____________-~~----_+------



18
























1























2


















3







271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















15
























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VI Conclusion







17



Respondent

By ____________-~~----_+------



18























2


















3







271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















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12
























13
























14







(W Va Nov 20 2015)
















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VI Conclusion







17



Respondent

By ____________-~~----_+------



18


















3







271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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271-308




court held








4























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















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12
























13
























14







(W Va Nov 20 2015)
















15
























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VI Conclusion







17



Respondent

By ____________-~~----_+------



18























5















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















15
























16
















VI Conclusion







17



Respondent

By ____________-~~----_+------



18















689 Syl pt 8 (1982)









6


2015)

V Argument








evidence













7








552 (2013)













8























9
























10





















11























12
























13
























14







(W Va Nov 20 2015)
















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VI Conclusion







17



Respondent

By ____________-~~----_+------



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2015)

V Argument








evidence













7








552 (2013)













8























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12
























13
























14







(W Va Nov 20 2015)
















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VI Conclusion







17



Respondent

By ____________-~~----_+------



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552 (2013)













8























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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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VI Conclusion







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Respondent

By ____________-~~----_+------



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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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(W Va Nov 20 2015)
















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VI Conclusion







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Respondent

By ____________-~~----_+------



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VI Conclusion







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Respondent

By ____________-~~----_+------



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VI Conclusion







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Respondent

By ____________-~~----_+------



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Respondent

By ____________-~~----_+------



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IN RE: TAX ASSESSMENT OF CABELA'S RETAIL, INC. BRIEF …...52,332,200.00 in 2009 and $50,085,900.00...

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Transcript of IN RE: TAX ASSESSMENT OF CABELA'S RETAIL, INC. BRIEF …...52,332,200.00 in 2009 and $50,085,900.00...